Date
23 March 2017
Rodrigo Duterte is leading his rivals in the polls ahead of the May 9 presidential election but the markets don't like what they see. Photo: Bloomberg
Rodrigo Duterte is leading his rivals in the polls ahead of the May 9 presidential election but the markets don't like what they see. Photo: Bloomberg

Philippine peso dips as Trump-like mayor leads presidential race

There’s at least one aspect of Rodrigo Duterte’s surging Philippine presidential campaign where the numbers are sharply down.

As the Davao City mayor continues to soar in pre-election polls, he is causing turmoil in the financial markets and the peso is among the hardest hit.

Bloomberg is reporting that the peso has lost 1.6 percent in April, making it the worst performing Asian currency this month.

Duterte spent 22 years running the city of 1.5 million people and trailed his two closest rivals in a Bloomberg survey of economists on which candidate would best steer economic policy.

But the latest polls show him 12 percent ahead of his closest rival, Senator Grace Poe, for the May 9 vote.  

Outgoing President Benigno Aquino has won rating upgrades and investor plaudits for transforming an economy once dubbed the “sick man” of Asia, achieving the highest growth since the 1970s.

Duterte’s popularity has been boosted by popular anxiety over crime and, like US Presidential candidate Donald Trump, supporters praise him for his straight-talking style.

As the election looms, Philippine bond risk has climbed from near an eight-month low and foreigners have pulled US$41 million from local stocks this month.

“Duterte represents uncertainty,” said Edwin Gutierrez, who helps oversee about US$11 billion as head of emerging-market sovereign debt at Aberdeen Asset Management Plc. in London.

“He’s a bit of a one-trick pony with his law and order message. I don’t think he’d do anything to upset the apple cart with economic policy, but I don’t see economic reform as being his priority.

The comparisons to Trump are obviously rather unflattering whether justified or not!”

The peso fell 0.1 percent to 46.81 per dollar as of 1:30 p.m. in Manila, while the nation’s benchmark stock index dropped 0.9 percent.

The currency is headed for its worst month since August and reached 46.943 on Tuesday, the weakest level in seven weeks.

ING Groep NV said it’s reviewing its forecast for the exchange rate to weaken to 47.60 by the year-end.

Local currency bonds have handed dollar-based investors a loss of 0.5 percent this month, a JPMorgan Chase & Co index shows.

“We could see the peso hitting 48 per dollar before heading back to 46.50 by the end of the year,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila.

“It’s driven by fear and the normal reaction of local investors is to buy the dollar.”

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RA

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